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Sensex Opens Over 400 Points Down; IT Stocks Fall

Asian stocks are lower today as Japanese and Hong Kong shares fall. The Nikkei 225 is off 1.1% while the Hang Seng is down 0.3%. The Shanghai Composite is trading up by 0.2%. US stocks fell more than 1% on Thursday as the European Commission issued a warning regarding Italy's budget and concerns mounted over the possibility of strained relations between the United States and Saudi Arabia, further denting investors' appetite for risk amid global trade tensions and rising interest rates.

In the latest development, in what comes as a major blow to employees working on an H1B visa in the United States, the Donald Trump-led administration has announced that it would soon announce major changes that will likely change the definition of specialty occupations under H-1B visas.

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Furthermore, the new proposals will also revise the definition of employment under this foreign work visa category.

The H-1B visa is a non-immigrant visa that allows US companies to hire foreign workers for special job posts that require theoretical or technical expertise. The Trump administration is reviewing the H-1B visa policy to ensure that it is not misused by companies to replace American workers.

The latest move, which has been announced as part of the Unified Fall Agenda of the Trump administration, is expected to have a bad impact on Indian IT companies and small and medium-sized contractual IT sector firms running in the country which are mostly owned by Indian Americans.

According to The Department of Homeland Security (DHS), the US Citizenship and Immigration Services (USCIS) is planning to come out with its new proposal by January 2019. It is believed that revising the definition of specialty occupation will help in obtaining the most expertise foreign nationals via the H-1B programme.

The DHS said that making changes in the definition of employment and the employer-employee relationship will help better protect US workers and wages. The regulatory body will also reportedly propose additional requirements to ensure H-1B visa holders are paid appropriate wages by their employers.

In addition, the DHS is planning to remove regulations that make certain H-4 spouses of H-1B non-immigrants as a class of aliens eligible for employment authorization.

The department is also finalizing its interim regulations governing petitions filed on behalf of alien workers subject to the annual numerical limitations applicable to the H1-B non-immigrant classification. The rule will prevent an individual from filing duplicate petitions on behalf of the same alien temporary worker.

Moving on to the news from cement sector. ACC Ltd on Wednesday posted a 15.7% rise in quarterly profit, which fell short of market estimates as expenses rose.

Standalone profit was Rs 2.1 billion (US$28 million) for the third quarter ended September 30, compared with Rs 1.8 billion a year earlier.

So, if the change in quarterly earnings is a misnomer, what should investors look at?

Well, as per Tanushree Banerjee, Co-head of Research believes that the annual earnings are a better and more normalized picture of the company's performance.

But the market is certainly myopic. There is typically a big contrast between annual earnings performance of companies and the extent to which they find favour amongst investors.

Follow the Quarterly Result Investing Herd at Your Own Risk

Note that, stocks that were beaten down over several quarters did brilliantly after declaring their March 2018 quarter numbers. Even if their 12-month earnings performance was a disappointment. Beware of following such herds.

By the way, in our latest edition of the stock market podcast, we have our Research Analyst, Radhika Pandit present a contrary view on PSU sector. She talks about good PSU stocks that you must look at. Listen in... visit SoundCloud, iTunes or Stitcher.

Stock Market Updates

SHEELA FOAM LTD share price has surged by 5% and its current market price is Rs 1,458. The BSE FMCG is up by 1.2%. The top gainers in the BSE FMCG Index is SHEELA FOAM LTD (up 5.2%). The top losers are GILLETTE INDIA (down 0.3%) and TATA COFFEE (down 0.4%).

ADANI TRANSMISSION share price has surged by 6% and its current market price is Rs 231. The BSE POWER is up by 0.5%. The top gainers in the BSE POWER Index are ADANI TRANSMISSION (up 6.5%) and RELIANCE INFRA (up 6.9%). The top losers are THERMAX LTD (down 0.2%) and TORRENT POWER LTD (down 0.7%).

BLUE STAR share price has surged by 5% and its current market price is Rs 646. The BSE CAPITAL GOODS is up by 0.6%. The top gainers in the BSE CAPITAL GOODS Index are BLUE STAR (up 5.3%) and CG POWER & INDUSTRIAL SOLUTIONS LTD (up 6.8%). The top losers are THERMAX LTD (down 0.5%) and V GUARD IND. (down 0.7%).

DENA BANK share price has surged by 5% and its current market price is Rs 18. The BSE BANKEX is up by 0.1%. The top gainers in the BSE BANKEX Index are DENA BANK (up 5.4%) and YES BANK (up 6.1%). The top losers are SBI (down 0.7%) and AXIS BANK (down 1.1%).

BANK OF MAHARASHTRA share price has surged by 11% and its current market price is Rs 15. The BSE BANKEX is up by 0.4%. The top gainers in the BSE BANKEX Index is BANK OF MAHARASHTRA (up 10.5%). The top losers are SBI (down 0.4%) and AXIS BANK (down 1.0%).

If you turn the clock back, the current macroeconomic climate is nothing new. The markets have seen them all, and every downcycle has been succeeded by gravity defying gains...more so in the small cap space. This time will be no different.

Many investors prefer to invest in offshore funds because of the rupee depreciation and on-going downtrend in the markets, but it is to be invested only when there is no option available to invest in India.

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